With California’s public school system facing economic uncertainties – even with the passage of a tax increase under Proposition 30 – some of the most financially troubled districts have been elevating the payroll for top administrators, a review of district data shows.

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In the 2012-13 school year, a record 188 districts – with about 2.6 million students – have landed on a special California Department of Education list designed to sound the alarm on possible financial peril.

One is the Los Angeles Unified School District, the nation’s second-largest district, which has been buried under a cumulative $2.8 billion deficit for the past five years and has eliminated more than 12,000 teaching and staff positions.

Los Angeles Unified pays Superintendent John Deasy $384,948 a year, about five times the salary of the average teacher. Deasy turned down an increase in his base pay, from $275,000 to $330,000, when he became superintendent in 2011, but accepted the raise in 2012.

Since 2009, the district has raised its superintendent’s salary 32 percent.

Also in the financial basement is the South Monterey County Joint Union High School District. Between 2010 and 2012, average teacher pay dropped 13.5 percent, from $86,703 to $75,018.

But after a takeover of the district in 2009, state officials awarded a $24,606 pay boost, also to be paid by the district, to top administrator John Bernard.

The resulting salary of $201,606, which remains in place for new State Administrator Daniel Moirao, is more than the base pay of Tom Torlakson, the state superintendent of public instruction, and Gov. Jerry Brown, who get $143,571 and $165,288, respectively.

A California Watch examination of 40 of the largest districts on the financial watch list revealed that 21 have raised their superintendents’ salaries since 2009. Some of the raises are modest – a small percentage. But others are more dramatic. Among them:

The Riverside Unified School District – which has made $100 million in cutbacks since 2008-09 – raised Superintendent Richard Miller’s total pay for the current school year from $267,208 to $314,963, including benefits, a boost of 18 percent. Since 2009, the district has raised its superintendent’s salary more than 14 percent.

The Lynwood Unified School District, which projects a 2012-13 operating deficit of $6.8 million, raised its superintendent’s base pay by about 23 percent, from $200,000 to $245,000, two years ago. Counting benefits, district chief Edward Velasquez makes $287,681.

The Alvord Unified School District in Riverside has seen the superintendent’s pay and benefits increase from $192,375 in 2009-10 to $249,060 this fiscal year, a boost of nearly 30 percent. Teacher salaries range from $57,136 to $113,460.

Last year, voter approval of a tax increase under Prop. 30 relieved pressure from schools that were facing steep budget cuts. But the initiative, spearheaded by Brown, comes amid a national debate over high salaries for superintendents.

In February 2011, against heavy opposition, New Jersey Gov. Chris Christie succeeded in tying the pay of superintendents to enrollment, with a maximum salary aligned with Christie’s pay – $175,000. Districts with more than 10,000 students can apply for a waiver to pay its superintendent slightly more.

“In these hard economic times, superintendent salaries in New Jersey are costing taxpayers more than $100 million per year,” the governor’s office said in announcing the reforms. The state estimated an initial savings of nearly $10 million.

New York is pursuing similar legislation for school district superintendents across the board. Currently, the state caps the salaries, at $166,572, only of those who head the state’s 37 regional education agencies.

No such efforts to cap salaries are under way in California.

“Given that taxpayers are the source of the incomes of superintendents, abnormally high six-figure salaries for these and other top administrators are indefensible,” said Lance Izumi, senior director of education studies at the conservative Pacific Research Institute and a Koret senior fellow. “Gov. Christie’s salary cap is one very legitimate way to address the local salary issue.”

Superintendents may be likened to the CEO of a Fortune 500 company, said Lawrence Picus, vice dean for faculty affairs and a professor at the USC Rossier School of Education. But superintendents, Picus added, are charged with something more important than simply raising money: They help shape the minds of children.

As such, their duties are more essential than the chief of, say, Citibank, he said.

“Superintendents,” Picus said, “are horrendously underpaid” compared to those charged with running the same-sized organization in the private sector, adding that “beating them up over salaries seems unfair.”

Compounding the problem is that California has slashed the amount of per-student funding to an average of $8,908 in the 2010-11 school year, compared with $11,764 for the rest of the nation, according to the California Budget Project.

“California dramatically underinvests in schools,” Picus said.

Raises amid money troubles

Few school districts are in more financial trouble than the Inglewood Unified School District in Los Angeles County, which was seized by the state and given a $55 million loan in mid-September. It was the ninth district since 1990 to request such a bailout. The district’s elected school board lost its decision-making authority in the process.

Competition from private, parochial and charter schools; declining enrollment; and a bleak local economy have impaired the district’s ability to stay afloat, according to the state Fiscal Crisis & Management Assistance Team, an independent agency that has reviewed the budgets of more than 700 school districts, county offices of education, community colleges and charter schools since 1992.

Yet, for the 2011-12 school year, the district raised then-Superintendent Gary McHenry’s total compensation by $17,938, or 6 percent, to $295,187. Currently, the superintendent position is vacant.

The Paso Robles Joint Unified School District also is among those in the worst financial state. The district was near insolvency last fiscal year and will be taken over by the state unless it takes “corrective action,” a San Luis Obispo County grand jury warned in a report last year.

From 2008 to 2011, during which a “perfect storm” was brewing, Paso Robles “ignored dwindling reserves for three straight years ” while continuing to fill nonessential positions, the grand jury said in its report. The district also discovered faulty accounting practices led to a “$1.58 million hit to last year’s bottom line.”

Still, Superintendent Kathleen McNamara has received raises in base salary since 2009, from $161,813 to $182,500 for 2012. Factoring in the district’s 12 furlough days this school year reduces her salary to $172,767. McNamara has declined both 5 percent and 10 percent longevity increases based on years of service.

As to whether her salary is fair, McNamara said only others can make that determination.

“However,” she added, “I do feel taking the eight furlough days for the past four years and 12 furlough days this year as part of my commitment to assist in balancing the district budget was very appropriate and the right thing to do.”

Some school boards that have struggled with finances have found allies in the public.

For parent David Hadley, who has four school-aged children in Manhattan Beach schools and is president of an investment firm, Hadley Partners Inc., a good superintendent can make or break a district. He referred to the giant Los Angeles Unified to illustrate his point.

“Because these institutions are big, employ lots of people and have a big impact on society … a good manager is the greatest bargain in the world,” Hadley said in an email.

Hadley estimated that in Los Angeles Unified, which has a 2012-13 budget of about $6 billion, even a “1 percent difference in how well that budget is spent … is arguably worth $60 million to the LAUSD.”

Good superintendents “are worth their weight in gold,” Hadley said. “And bad ones are consuming valuable resources and delivering inferior educational outcomes even if you pay them zero.”

Robert Haley, superintendent at the Cotati-Rohnert Park Unified School District – which, like South Monterey, is among California’s bottom 12 districts – doesn’t find anything wrong with pay raises. Haley, who came on board in July 2011, when the salary was $177,043, chose to accept $140,000, “as I knew the fiscal state of the district.” He is now getting $147,500.

“While $175,000 may seem like a high salary, and it is, perhaps it would give some context to see how many state employees in the Department of Corrections or working for the Legislature make far in excess of that without the same responsibility and risk,” he said.

Administrators’ pay outpaces teachers’

Salaries for school administrators started to rise significantly in the flush early 2000s. At the Fairfield-Suisun Unified School District, for example, administrators saw their compensation soar by as much as 74.5 percent between June 2001, when teachers began a 10-day strike over pay, and July 2006, according to the California Teachers Association.

Teachers received a 2 percent pay increase during the same period. For Melanie Driver, president of the local teachers association, the relatively meager increase for teachers compared with the substantial raise for administrators is unfair.

“Things got out of whack,” Driver said. “As long as I can remember, administrators’ salaries have been higher in proportion than teachers’ salaries.”

Fairfield-Suisun Superintendent Jacki Cottingim-Dias defended her pay of $321,266, counting a $15,850 giveback. She has donated $23,650 back to the district in the past two years.

“My job is not anything like a teacher’s,” she said. “My job is more like the CEO of a corporation with 1,200 employees and a $75 to $80 million operating budget each year.

“My basic work day is 10 hours – that’s a good day. Usually, I work between 12 and 16, 17, 18 hours on board meeting nights. I’m on call 24/7. For example, (in September) I have community events Saturdays and Sundays and am expected to be there as a community leader. And I work roughly seven and a half weeks longer than a teaching position does.”

Driver credits Cottingim-Dias for rekindling trust between the administration and teachers. Still, it’s difficult to take back a raise once it’s been awarded, Driver said, adding that a disparity remains.

Salary obligations leave districts with little wiggle room to devote money to other needs, a situation growing more pronounced as the state slashes the money it provides districts.

“Wages and benefits account for 86 percent of the total budget in a typical healthy school district,” said Paso Robles board trustee Field Gibson. “In our district, that had gotten to be a little over 91 percent. But a school district is not in the position to materially reduce that level of expenditure without the agreement of the unions and labor bargaining units.”

Districts also have made big payouts when superintendents are changed. Walnut Valley Unified School District in Los Angeles County paid a total of $474,163 for its superintendents in 2010-11, buying out the contract of Cyndy Simms for $342,944 and giving incoming chief Dean Conklin $131,219.

Izumi, with the Pacific Research Institute, noted that a recent Sacramento County grand jury report found that the Sacramento city school district had an annual budget of $366 million and an unfunded retiree health benefit obligation of $560 million.

“As bad as the salaries of top administrators might be, the real threat to district solvency is the unfunded liability that many of them face due to unfunded health benefits for retired teachers,” Izumi said.

The California State Teachers’ Retirement System has a long-term unfunded liability of about $64.5 billion.

State administrators’ salaries

While school district boards typically set salary levels, the state takes that over when it assumes control, at least for the superintendent’s salary. This was the case at South Monterey County when Bernard, the state administrator, came aboard.

Bernard soon concluded that the district, which had discovered a huge accounting error that left it with a deficit of $4.5 million, was dysfunctional and that the task of restoring its fiscal health amounted to a “daunting task,” according to Department of Education spokeswoman Pam Slater.

The state later instructed the district to increase Bernard’s pay from about $177,000 to $201,606. “Once the severity of the problems came to light,” Slater said, the state and Bernard “believed the additional compensation was appropriate.”

In fact, the state Fiscal Crisis & Management Assistance Team found that the district had begun struggling financially as far back as 2002, partly due to “inconsistent leadership” and “ineffective governance.”

The state continues to monitor such situations closely, said Paul Hefner, communications director of the Department of Education.

When asked if a district deep in red ink should be forced to pay a salary boost, Hefner said: “The severity of the situation made additional compensation necessary and appropriateand, despite the costs involved, created the best chance for the district to put itself back on solid financial ground.”

Mike Foster, president of the South Monterey board of education, did not respond to email inquiries.

New administrator Moirao said the state administrator has a tough job, requiring that he or she go it alone, often without support from the district board.

“They must make decisions,” he said, “that are not very popular.”

This story was edited by Robert Salladay and copy edited by Nikki Frick and Christine Lee.

California Watch is part of the independent, nonprofit Center for Investigative Reporting, the country’s largest investigative reporting team. For more, visit www.californiawatch.org.